Infrastructure Could Be Trump's Key to Tax Reform

— April 28, 2017

By Ingo Walter

Like a ship that collects lots of barnacles after a long time at sea, the federal tax code affects economic performance at all levels.

Getting close to the end of his first 100 days in office, President Trump badly needs a win on domestic policy, and he’s selected tax reform. Tax reform is almost as complicated as health care reform, but most people believe good tax policy can benefit things they care about - incomes, employment and growth - so the political underpinnings are there to bust the bunker of special interests entrenched in the current US tax system. A promising approach: Use infrastructure as a powerful wedge to meaningful reengineering of the tax system. There are plenty of connections between the two worlds that could make this work.

Like a ship that collects lots of barnacles after a long time at sea, the federal tax code affects economic performance at all levels. Don’t believe it? Read it. Or at least do your own taxes this year to better understand what’s inside the box. It’s a disgrace.

The fact that the last significant tax reform in the US took place over 30 years ago - in 1986 under Ronald Reagan - shows how hard it is to make meaningful improvements. Riddled with loopholes, carve-outs for special interests, attempts at social engineering, conflicts with state and local governments, and pitting stockholders against bondholders, foreign against domestic tax residents - the list goes on and the lawyers and lobbyists keep circling.

Read the full article as published by The Hill.
___Ingo Walter is the Seymour Milstein Professor of Finance, Corporate Governance and Ethics.